[captioning made possible by nbc universal] chris: the president and the pastor. was america's leader right to get in this fight? did he give this strange preacher the media clout he fought in their fst place. how do you win the hearts and minds of muslims with one of us daring to burn their holiest book. obama's elengths was a big plus

to the muss little world. in this battle for the american mile is the president smart to rally against tax cuts for the rich? if you want the center then why lean left? hi, i'm chris matthews. welcome to the show. with us today, hdnet's dan rather, the bbc's katty kay, nbc's andrea mitchell and the "washington post"'s david ignatius. first up, on this ninth anniversary of 9/11, the gnawing hostilityy between some in this country and the muslim world became an outright obssion. here is the president friday defending his approach to that pastor's threat to burn the koran. >> this kind oaf behavior or threats of action put our young men and women in harm's way. and it's also the best imaginable recruiting tool for

al qaeda. i hardly think we're the ones who elevated this story, but it is in the age of the internet something that can cause us profound damage around the world. and so we have to take it seriously. chris: is he right, dan rather? >> i think in the main he's right. one can quarrel about whether they by raising the profile gave it too much oxygen. overall give them high marks for how they handled it. chris: from the pastor's point of view this is what we wanted, an enga wmentith the president of the united states. i assume. did he win this battle? >> it certainly sounds like he wanted attention and when the president called it a stunt it was pretty much much that and he said he wasn't going to stop, this even if called by influential people. the president was going to get drawn into it as soon as he gave an interview on

television. and by referring to himself as the commander in chief and by referring to the affect this had on american troops aboard -- abroad, head me this a serious issue and if he was going to talk about it that was the right way to do it. chris: there were casualties already on this. this is a real world event. >> that is why he took the stage as commander in chief. that is why bob gates tried to talk him down. this was a top national security issue. everyone at the cabinet and foreign policy level were working on this. you saw the rollout from david cameron in the u.k. and other allies, they were trying to avoid what exactly happened, when were fatalities. they were worried about u.s. troops and by appealing to the pastor on the basis of our men and women in uniform. that was the best approach. they didn't want to elevate

him. he is fringe. there are cument aspects to this teeny church. it is extraordinary crazy drama but they had to deal with it. chris: david, you travel the muslim world. u.s. ow the viral aspects of our communication can be so dangerous. is there any way we can avoid this or is this going to be a firefighting job of the president from here on out? >> this is dry tender and pastor jones, whether knowingly or not, probably knowingly, was throwing a match. i think the reason pastor jones ended up becoming important was because president obama unnecessarily raised the temperature himself on this question of islam phobia by jumping in on the issue of a ground zero mosque

unnecessarily. he raised the temperature and that's why pastor jones is important because he fits that larger narrative of an america tilted towards it. chris: this week as you followed the events leading up to this, as it got to the end of the week, there was no mention of the mosque or his associates down there and then people like sarah palin came out and john boehner, the republican leader, they threw out that connection. >> that's a very important point. let's don't forget here that the press, and the media in general bear some responsibility here by running so hard with this story so early and putting such comments as you just said not only on the air but high on the airplane, we have a lot to answer for in this as well and i think we've all learned thsomeing out of this. the message, if we consider, if we allow the air to get out

that we think all muslims are enemies then we're going to have them all as enemies. we have to be very careful about that, especially with this rollup to the 9/11 when we should be in rev vens and resolve. chris: when general petraeus spoke outs earlier this week be-- he didn't do it to get press or ratings. he did it to protect hiss troops. >> yes, because he thought there was a real threat to his men and women in uniform. we've seen demonstrations around this pastor around the world. it was interesting to watch the reaction to pastor jones and his idea of burning korans to the mosque in ground zero. i wonder whether the number of people that came out against pastor jones, said this is not what we do in america -- there was almost a sense of craziness

about the response to the mosque and those polls that how many in america view it as suspicion you almost look at the pendulum swinging back again and they came out firmly against the koran burning. chris: go ahead, andrea. >> in this current atmosphere, the viral nature of this, there's almost no way to contain this kind of con that graduation, even it is minor and ridiculous. chris: if you got together a meeting of four or five top people in the news organizations, that wouldn't keep the kid with the cell phone -- >> afghanistan is responding. >> overseas there is no sense that there's freedom of press, a first amendment, the president of the united states can't order this man off the stage. cruyff when you saw to allamakee, doesn't he get it?

>> no. chris: david, don't they get the fact that the president of the united states, there's a hell of a lot of freedom in this country. >> that's precisely what they don't get. >> a president of iraq would never come out and say -- >> because around the world if a president is unhappy about something it stops. i think they had to show that was the case here. to the point that dan was making, our ability to act as a gatekeeper in the big media networks, it's over. this is a viral world. this got around not because the big press churned it because -- but because it went out on the internet. >> i agree but however, we do have a responsibility -- we can do a better job of putting in perspective, putting into context, raising the question about what is and what's not pate rich -- at a time tim. is -- pate tim.

i queet agree. once it goes viral, nobody can aspire to put it down. chris: as a country who electsed barackussein obama. we knew his background, his heritage. the arab world liked that. overall has the election of barack obama opened ther doo to better relations of the islamic world or more american negativity? >> i think it's opened the door to both but in balance and on the main it's still a net plus. >> i agree that it's a net plus, particularly when you compare it with what came before and the invasion of iraq. >> i agree because after the invasion of eric and with this president and his multicultural background it is a net plus. >> there's no question as i

travel around the world that president obama raised expectations that there would be a different kind of america. that can be dangerous. the possibility of disappointment, chronic disappointment -- but you told us that this would be different and it isn't. i think that's a real danger for us going forward and i think obama and his advisors understand that. chris: i think grown-up response and childish responses are always going to be interesting. >> don't look for grown-up responses. chris: before we break, the president wanted this past week to be about his plan to pull this country out of the economic digits -- ditch it's in. no such luck. here's dave and jay. >> the economy is so bad i saw a possum playing dead today just to collect the insurance money. that's how bad. >> here's another indicator how

bad the comply is. i was in times square today and a guy comes up to me, tried to sell me a fake timex. chris: for 50 years late nights has been asking that how bad is it question and nobody has done it better than johnny carson. in the brutal energy crisis of the 1970's, the stock market was in the tank and inflation was rampant. watergate was about to destroy nixon's presidency. here's johnny, 1974. >> you know the economy is bad when you're walking down the stndet are the panhandler wants 10 cents. i say for a cup of coffee? no, i want to get a controlling interest in i.b.m. chris: i.b.m. was under five bucks back then. a year later ford was president and the employment picture wasn't much better. here's johnny. >> let's take our nightly

survey -- survey on the state of the economy. be honest, how many of you this week have locked your child in a bathroom with an indoor plant and a squirrel and told him he was away at summer camp? chris: well, that registration soon ended but -- recession but five years later, another one. jimmy carter was struggling with the aaronian hos taj crisis and skyrocketing inflation. >> did you read where the government says the recession is over? it is not over. before the show tonight a guy stuck me up in the parking lot, pulled out a gun scombbs i need the money to keep up the payments on this gun. chris: when we come back, we'll talk about the president's election populism.

will democrats march to the polls crying come on, let's raise taxes on the rich?

chris: welcome back. as they enter the final turn of the midterm raise -- race, both sides are putting their bets on class fare cuts. republicans say extend the tax cuts for everyone, including the rich, for two more years. on the democratic side they seem to have forgotten they've never won any campaign promising a tax hike. fritz mondale, 1984. but president obama keeps pushing them. >> with all the republicans' talk about wanting to shrink the deficit, they would have us borrow $700 billion over the next 10 years to give a tax cut

of about $100,000 each to folks who are already millionaires. we should not hold middle class tax cuts hostage any longer. chris: the question of the hour. is it smart politics for the president to go populous this way, to say i'm going to get democrats to show up and vote for me because they're going to be mad at the rich people? >> i don't think ts old dog will hunt. it hasn't in previous elections. i don't think it will. what may work, he says, look, you may or may not like what i've done here but i want you to remember that we're looking for long pull and just compare where we are now and where we were when i came in. this business of tax cuts for the rich. the populism thing doesn't cut it. in the republicans they've gotten a long way by saying

almost anything he proposes is a tax increase and don't forget it. chris: i want to open this to everybody. katty, do you think it sells this populism of ok, you're having it rough but the rich people are getting their tax cuts extended. it seems like british labor party. >> one of the extraordinary things about this country is you don't mind people getting rich. look at the press conference he gave on friday. here is a professor trying to be populist. chris: can he solve this? >> that's going to be the big test. it's a very tough bumper sticker. he's great at rallies and he gets energy is. we saw it over health care. so far he hasn't found his voice. he began to find it at friday's press conference. chris: he's got to sell the people between now and people when they vote and say the reason you're not getting your

tax cut extended is because those republicans are nil bustering this. but republicans -- filibustering this but republicans have a reputation of cutting taxes and they're not in power. >> he's trying to turn the argument in that direction. the public is enraged and the energy behind the tea party movements is anger at the rich people on wall street who did these terrible things and got a bailout. if he could tap into that chris: there is a populous potential. >> there is. the democrats' problem is they've become the party of responsibility on fiscal mearlts. they're the party of wall street. chris: why doesn't he go out against the big oil companies that almost ruined the gulf of mexico, the wreet companies that were doing that cowboy business up on wall street, almost killed the american economy. >> they tried that after the

scott brown election. but it's not natural to him. >> he said the democrats are now -- have been the party of wall street. you can't be populous on the one hand and be the wall street champions on the other. >> that's the problem. this is their bailout. the bailout the public is so angry about. i think it was good policy but it infuriated people. it began with bush but tarp came through under obama. chris: don't add to the confusion, deaveed. the stimulus is democrat, tarp was republican. >> but geithner and the bailout are properly linked in the public mind. >> there was much more rage against wall street and even b.p. than against rich people generalerly. chris: if the democrats get in the ditch and down politically it's a good way to get about 45% of the vote. it never wins for you.

it's what dukakis did. ok, damn it, class warfare. i can get 45 bank account. >> you're a mentor of the great tip o'neal. all politics is local. it's great for us to be talking about overarching themes but it's congressional district by congreional derrick. state by state senate. chris: but that's wha the democrats are hoping. don't you sense in the apology there's a wave wave against the democrats in the economy? >> there's no question. >> the tea party candidates have that class warfare thing. chris: it's an interesting time. not a great time for the democrats. when we come back, scoops and

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chris: welcome back. darnings tell me something i don't know. >> the groups of women who supported so fervently hillary clinton and have mostly disbanded after the election are getting together in a united meeting for the first time on october 19. where this goes and what this means i don't know but you can bet when that meeting take place there will be a lot of people paying attention. chris: who is tir leader? >> i don't think they have one at the moment. it was a group from all over the country. chris: is this a hillary based organization? >> no, i don't think that she had a hand in it at all.

it may or may not turn out to be significant but they're getting together october 19. chris: how do i know it's in new york? go ahead. >> as kids go back to school i'm a bit obsessed with children and computers but in august for the first time ever, americans spent more time on facebook than on google and they spent 41 million minutes on facebook in august. chris: that's not a good economic sign. >> i'm worried. >> when hillary clinton leads middle east peace talks in the region this coming week, something could be happening this time. it's the first time she's fully engaged and she could accomplish something that bill clinton did not. chris: hmm, i love the way you said that. there was a feminist aspect. joe, next year the president's security team is going to turn over.

gates will leave. national security advisor joins -- jones will leave and the chairman of the chief joints of staff will leave. chris: that sets up the question of eth week. will president obama make major changes in his cabinet after the election. ♪

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chris: welcome back. looks like white house chief of staff rahm emanuel will leave to run as mayor of chicago. will obama make changes in his snrgs >> there will be other changes. >> it had be extraordinary if he didn't if the chief of staff changes. >> yes, and if both houses go republican, watch that space for what kind of chief, there -- whether it is republican? >> yes, i would expect so and maybe a chief of staff like tom e.schl

as governor, he cut waste got rid of the mansion and the limo budgets were balanced. $4 billion in tax cuts. world class schools and universities. clean energy promoted. 1.9 million new jobs created. california was working. i'm jerry brown. california needs major changes. we have to live within our means; we have to return power and decision making to the local level-closer to the people and no new taxes without voter approval. jerry brown the knowledge and know-how to get california working again.